Rudd and Co will go back to scheming

With Kevin Rudd’s support improved since February, he and his backers will skulk away to the back bench and wait for their next opportunity. As long as he's in parliament, Rudd remains alternative leader.

Labor’s humiliating leadership debacle will do nothing to revive broken business spirits or to put the leadership issue to rest for long. Make no mistake, folks: Kevin is still from Queensland. And he’s still there to help.

In the meantime, uncertainty is and remains, the only theme arising from Canberra.

Julia Gillard and Wayne Swan attempted to put the leadership issue to bed once and for all last night, declaring "it's over". Gillard supporters are now spinning the line that Kevin Rudd is fatally wounded after yesterday’s non-tilt at leadership.

Press gallery journalists are split. Some sense another challenge in June. Others declare Rudd is dead.

In circumstances like these, it's hard to trust the judgement of press gallery journos. Having watched the blood letting so close up, it’s hard for any normal human being to see how it could all possibly be repeated.

But time fades all wounds and there seems no end in sight to Labor’s parliamentary leadership nightmare.

In the same way you know vinegar and oil will never mix, instability remains the only certainty. 

Only Rudd’s complete removal from parliament would achieve a stable mix. 

One suspects the famous potty mouth was in full flow yesterday, despite his somewhat shellshocked appearance. This was not the time of his choosing. Not yet.

Hell hath no fury like a Kevin scorned. Amid all the leaks, destabilisation and attempts to hold a minority government together, Rudd’s burning desire to return to power has been the only certainty in Australian politics for the last three years. 

Yesterday's debacle may only have galvanized him even more.

Media reports of Rudd’s support base in caucus vary, putting his supporters yesterday somewhere between 37 and 46. This was short of the 51 needed to win a majority of the 100 strong caucus. But still an improvement on the 31 who voted his way last February.

Fatally wounded? Or a man of his word? A man who gives an undertaking not to challenge and sticks to it – unlikely some other policy flip floppers we could name. 

Arguably, the narrative of reliable Kev is only reinforced after yesterday's performance.

While ever Rudd remains in parliament, he remains as an alternative leader for an increasingly desperate party on the brink of electoral annihilation.

Newspoll surveyors are already ringing voters today to take their pulse for the next set of polls. It is hard to imagine this week’s spectacle will have improved Labor’s standing, currently languishing at a primary vote of around 30 per cent.

How many bad polls will it take before leadership bubbles over again? The option for Rudd to be drafted on the eve of the election remains.

The May budget is now the next potential flash point.

Wayne Swan must now frame this budget with two Opponents in mind – Abbott and Rudd.

The task confronting Swan is Herculean. He must fund multi billion dollar promises on education and disability care in a context of falling revenues. He must map a convincing path back to surplus despite inevitable election year calls for new spending. 

Rudd and Abbott would both be in a better position to blame the Gillard government for a budget “black hole” and take their time about getting the budget back to black. After his broken promise over the budget surplus, Swan is under more intense pressure to achieve a surplus sooner. Failure by Swan to deliver a well-received budget will bring the leadership issue back to the fore.

It may not even take that long.

It is already abundantly clear the only winner from yesterday was Abbott. 

Once Labor realises this, how long before the leadership issue arises again? Will they, as Rudd said yesterday, let Abbott walk a clear path into the lodge? Are MPs, facing electoral wipe out, now in the mood to go gentle into that good night? Or will they rage rage against the dying of the light?

Rudd supporters like Richard Marles, Ed Husic and Janelle Saffin have announced they will go to the back bench. They will be joined by a sacked Simon Crean and by Joel Fitzgibbon who is “considering his position”. These Rudd supporters, now freed of their portfolio responsibilities, will join him on the back bench to plot and scheme in impotent rage.

Meanwhile, business leaders and employers can only plan for uncertainty. The policy differences between the two parties remain stark. Investment decisions influenced by energy taxes and mining taxes remain in the balance.

Meanwhile, it appears likely an unstable government will continue to mete out policy on the run.

Consumer confidence seems to have turned a corner lately – perhaps they relish the approaching prospect of making good on their political resolve to switch governments.

But business confidence is the missing link in this still fragile economic recovery. The Reserve Bank is watching keenly for signs of a turn around in non-mining sector business investment to signal the point when such below-normal interest rates are no longer needed.

You’d have to imagine this instability in Canberra will only keep them on the sidelines for longer.